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Home Buying 101 What s A Point, And When Should I Buy One?
A point, or discount point, equals one percent of a loan amount. For instance, one a mortgage loan of $200,000, one point would equal $2,000.
Why Do People Pay for Points?
Some home buyers pay points to their lender at closing in order to lower their interest rate over the life of a loan. Paying a point on a standard 30-year loan will typically lower the interest rate by .125 percent.
Should I Pay for Points?
Buying points can lower the interest rate of a mortgage loan, but that doesn't automatically make it a good option for every situation. For instance, if you only plan to stay in the home for a couple of y...
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